Orchard Services is a small, family-owned business operating. The company has always charged a flat fee per hundred square feet of lawn service for its services. The current fee is $30 per hundred square feet. However, there is some question about whether the company is making any money on jobs for some customers, particularly those located in remote areas requiring considerable travel time. The owner’s son Dennis, a recent Accounting graduate has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required

 

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Activity for the Year Activity Cost Pool Activity Measure Square feet cleaned (the 00s) square feet Lawns serviced 20,000 hundred Travel to jobs Kms driven 60,000 km Job support Number of jobs 2,000 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable Activity for the Year Activity Cost Pool Activity Measure Square feet cleaned (the 00s) square feet Lawns serviced 20,000 hundred Travel to jobs Kms driven 60,000 km Job support Number of jobs 2,000 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable

Answer rating: 100% (QA)

Orchard Services Answer 1 A B C D E FAB GAC HAD IAE Costs Amount Cleaning Carpets Travel to Jobs Job Support Other Total Cleaning Carpets Travel to Jo... View the full answer